Yahoo! Google Search Deal

Overview
Yahoo has recently announced a nonexclusive three-year deal with Google that will allow Google to serve up links and ads for up to half of the searches taking place on Yahoo’s websites.

The deal comes soon after Yahoo announced contractual updates with Bing, which gives Yahoo flexibility to work with other partners. This deal allows Yahoo to show Google’s search results within both the organic and paid listings. Since Yahoo does not have a crawler that searches the web for content, they are therefore obligated to use their partners to serve organic results. This is coupled with Google providing the search ads which will pay Yahoo an undisclosed percentage of the revenue from them. Google’s offerings complement the search services provided by Microsoft, which remains a strong partner, as well as Yahoo’s own search technologies and ad products.

What will change
As it turns out, not a lot, as Yahoo has been testing Google’s search results and ads since as early as July 2015. After seeing the results, Yahoo has entered into a deal with Google to continue showing the search ads. Like other non-Google websites, this will be executed as part of Google’s search partner network.

Previously, Yahoo had an exclusive arrangement with Microsoft Bing, which was renegotiated in March and left Yahoo an opening to work with other search ad providers. As part of the renegotiation, Yahoo agreed that Bing’s ads would appear on 51 percent of the desktop searches that Yahoo delivers. This leaves the other 49 percent to be “powered” by either Yahoo’s own ad system or any third party that Yahoo selects. However, Yahoo has no such limit on mobile devices, where Yahoo could elect to fully serve Google results at the expense of its own Gemini ads system.

The information released thus far suggests that both parties have extensive withdrawal options.

Either party may terminate, for any reason, with 60 days’ notice. Additionally, Yahoo can discontinue if Google doesn’t serve content quickly enough.

At present, Google will not serve search results to the U.S. for Yahoo until the Justice Department approves the arrangement. The deal excludes Europe, where Google has come under increased government scrutiny. Furthermore, if issues from regulatory bodies arise, both sides can elect to walk away from the plan.

Even though Yahoo is no longer the powerhouse that it once was, this deal has large implications for both Yahoo and Google. Google will provide Yahoo with search advertisements through AdSense for Search (AFS) that can be displayed on Yahoo properties and affiliate sites. Yahoo will get a percentage from the gross revenues these ads bring in, but calculations will vary drastically depending on where the AFS ads are displayed (e.g., U.S. desktop site, a non-U.S. desktop site, or on a smartphone).
Considerations

Yahoo will leverage Google’s technology while splitting the revenue. Google will have an opportunity to expand its reach and also increase revenue. From this view, this deal is mutually beneficial.

There are no metrics available as of yet to better understand the impact that this will present.

Yahoo is free to utilize as much or as little of Google’s services and does not have to meet a minimum number of search queries. This allows Yahoo the opportunity, if it chooses, to not send any queries at all.

On the other hand, Google has just teamed up to show its ads on the world’s 5th most visited website (according to Alexa). This can potentially lead to better results for Google, Yahoo, and advertisers, being that advertising on one network (Google) will not only showcase search ads on the single most visited website in the U.S., but the 5th (Yahoo) and 42nd (AOL ) as well.

At present, we see this as an addition to the already extensive reach Google holds on the search market. Utilizing this service will showcase varied results for each business, if not each product. Therefore, if interested in broadening your campaign, it will be best to discuss this with your Search Team to better understand the implications for each campaign separately.

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